Why should every frequent traveler consider a travel rewards credit card at least once?

June 8, 2018

A frequent traveler should not leave home without their travel reward credit cards. Till date, you may have told yourself that getting a travel credit card was a bad idea since you may end up spending more than you plan to. However, modern market research shows that with a majority of these credit cards, you stand a chance of extending your vacations, upgrading your travel and stay. The market is super competitive nowadays, and companies are feeling compelled to give incredible offers to their clients. These companies are making an extra effort to gain your loyalty before other companies get a go. That is one of the reasons; the rewards are becoming sweeter every day.

Here are a few sweet statistics that may persuade you to give in to your craving for an excellent travel credit card –

  1. An American citizen can earn over $227 per year after paying the credit card fees.
  2. One of these cards can get you almost $900 as a reward during the first year. That amount does include a sign-up bonus and an annual fee, but even then the sum is impressive enough.
  • You can earn a signup bonus within the first three months after spending something between $1000 and $5000 on travel. The sum depends upon the credit card company.

How can you improve your personal finance while using a travel credit card?

These credit cards come with the promise of attractive prizes and cash rewards. Sometimes, these rewards cards make it impossible to resist the temptation to overspend. That is especially true for millennial clients. Gen X clients and baby boomers exercise more control than the millennials while using their plastic money. They come with the temptation to overspend, and you should only get one if you have a lid on your travel expenses.

Travel rewards credit cards offer many benefits, but they are not for all travelers. Firstly, you would need a good credit score that is somewhere around 700, and you would need the financial capacity to pay the full balance off each month. It makes little sense to carry unpaid dues forward and pay high interest on it.

Never pay the minimum amount, if you can contribute more. Meeting the minimum payment requirement can result in the following situations –

  1. Your interest charges on the unpaid dues will outweigh the rewards and signup bonuses in less than five months.
  2. Within a short time, you will find the total first-year value dissolving entirely.

There are several companies, who deduct a month’s worth of points from the account in the event of a missed payment. You can always pay the due amount along with interest and penalties. However, restoring the lost points will take between $20 and $50 depending on the credit card company. You must also remember that credit cards for traveling can become costly if you do not spend enough. The base amount you need to pay per year varies according to the credit card company.

What a few little-known credit card secrets?

Many travelers prefer flying with a particular airline or staying at a specific chain of hotels. If you identify with this trait, you should look for co-branded travel rewards credit cards that have links to your hotel or airline of choice. It is especially favorable for frequent fliers and people, who travel out of town often for job requirements. These co-branded credit cards have tons of perks and reward systems that most regular credit cards do not offer. They offer lucrative signup bonuses as well as discount vouchers on each anniversary of the account opening. They can get you more than one or two points per dollar!

When is a cash-back credit card better than a travel reward credit card?

Unless you do a lot of international travel, you will not find travel reward credit cards to be helpful. This type of a card does not bear any foreign transaction fee. The Cash-back credit cards charge a 3% transaction fee quite often. The minimum transaction fee can add up to an imposing amount in case you travel to foreign lands frequently. Cash-back credit cards are better for touring locally.

Most people would not mind having some extra cash on hand for paying rent, utility bills, and travel expenses. If you always find yourself hard-strapped for money at the end of each month, you might benefit from a cash-back card instead of rewards card.

How to make the decision?

Answer the following three questions –

  1. Do you travel a lot?
  2. Do you travel internationally?
  • Are you able to make more than the minimum payment on each credit card?

If the answer to all three of these questions is a resounding “yes,” then a travel rewards credit card is the answer to all your travel budget-related concerns and queries.

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